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A moment of National Renewal? Or managed decline?

Having spent fifteen years as an entrepreneur before coming to Parliament, I’m from a world where the motto was simple…

…never let a good crisis go to waste.

And it is a motto that is more relevant to our national life today than ever.

This country is confronting a major intergenerational crisis — of debt, structural deficit, historically stubborn low productivity, fragmented and top heavy public services, intergenerational inequality and a new culture war between competing visions of a global or insular Britain.

This isn’t just mid-term blues or a post-crash wobble . This is a profound crisis of political economy on a scale of the 1940s and 1970s, out of which will come a New Order.

The only question is who will frame it? And on what basis?

For all of our sakes, we need to make this tumultuous period in our politics a moment of urgent national renewal.

For that to happen, we need a proper political debate across the centre-left and the centre-right. Based around the real choice that confronts us.

I want us to be able to tell our grandchildren that this was the moment that our generation did it.

A moment when we:

- tackled the structural deficit and unleashed a revolution of enterprise in the public and private sectors

- went global and connected to the emerging markets

- became a crucible of the innovative products and services that allowed the world to develop at a pace never before seen...

...unlocking a New Victorian economic model. Britain as a genuine innovation economy, the wellspring of new technologies that allowed the world to develop a new green, clean model of growth.

…and makes us a happy, prosperous, purposive and fulfilled nation once again.

Because, quite simply, the alternative is too awful to imagine.

In this alternative doomsday scenario, this could be the moment we finally failed as a great power. Dragged down into the second tier of fading nations by an ageing, debt-ridden, low-productivity economy and our own inability to confront our structural weaknesses.

Overrun by debt, the moment that those with any “get up and go” do just that and leave behind an isolated, old, introspective nation — an old people’s home off the coast of Europe with less and less money to pay its way.

Because we must not delude ourselves: unless we tackle the structural weaknesses in the UK economy and unleash a new model of innovation and productivity-led growth, this alternative narrative of decline is a very real prospect.

And, as the father of two children and a patriotic One Nation Tory, let me tell you this. It chills me to the bone.

So this is the choice we face as a country.

Renewal or decline. A more prosperous future or a much poorer one.

Which will it be? Do we have the will, the vision, the dynamism and the ambition to lead a campaign of national renewal?

Today, I want to argue that we DO and we CAN.

And I want to set out my thoughts on a Conservative vision for how this National Renewal can be achieved.

INNOVATION ECONOMY/OPPORTUNITY SOCIETY

At its heart, I believe this is about committing to a bold vision of an an Innovation Economy driving an Opportunity Society.

To create an economy that really does work for everyone…

...we need to spread the opportunities to participate more widely too.

As a One Nation Tory, I think we must never forget one fundamental insight:

The most important reason to have an innovation economy is to drive social opportunity.

There can be no innovation without opportunity, and no opportunity without innovation.

But to achieve that we need to tackle a flawed orthodoxy that dominates some traditional Conservative thinking…

…namely, the divisive and ill-headed apartheid which says: “Private Good, Public Bad”.

In this view, the public sector is inevitably destined to low rates of innovation and productivity.

But nothing could be more mistaken, or more harmful to our long-term national interest.

The truth is that unless we harness the public and private sectors together in a new partnership, we will never be able to tackle the structural deficit.

And let us never forget what the structural deficit means for us. It is, in fact, nothing less than a “bonfire in the basement of the British Economy”.

It means we are burning more money than we earn, even when the economy is growing.

And £1.5 billion of debt and £30 billion per annum on debt interest is the biggest case of intergenerational tension. It isn’t fair to saddle the young with the debt of a baby boom generation who “never had it so good”.

It is the design flaw at the heart of our economic system that could bring the whole building down unless we take radical action now.

So how do we go about it?

First, we need to recognise the scale of the economic reform that the debt crisis, and now Brexit, have made essential.

If we are to grow our way out of debt and have a new relationship with the EU and emerging markets…

…that will require a fundamental structural change in our economy.

Not tweaks, no fine-tuning. But reimagining how our economy works, and its place in the world. A new model of political economy fit for the post-Brexit world.

For Britain to thrive, this has to be a moment of profound structural economic change.

Unleashing innovation in the private and public sectors. Tackling our woeful historic failure to improve our skill base. Continuing to reform welfare so it supports work and independence not welfare traps which hold people in state dependence. Repurposing the City to better finance our fast-growth companies. Increasing the amount we spend on R&D. And connecting our businesses better to the emerging markets around the world.

Crucially it requires a New Partnership between the Public and Private Sectors.

But to go faster the state will need to be bolder than we have been before, using procurement to help UK innovation, embracing more innovative public services, and creating bold new incentives to make sure our public services help not hinder innovation.

Because we must be clear: innovation must be the lifeblood of our national life, the core principle upon which everything we do is founded.

Just imagine what a public sector deeply committed to Innovation could do:

The Department of Health and the NHS working with the Life Science sector to accelerate uptake of innovation so that Britain leads in digital and genomic health, and unlocks major industrial investment in return for price cuts and Accelerated Access.

The Department of Transport using its franchise power to create first markets for autonomous trains, smart signalling, digital road pricing and smart urban mass transit.

The Department of Education actively sponsoring UK leadership in Digital Learning, and using Lifelong Learning and Skills Passports and vouchers to create new markets for training and education.

Whitehall seriously committed to remaking our economy so it is fit for the digital age and the fourth Industrial Revolution.

But we can go even further than that.

Think about it for a second: what would a fully digital Government look like?

That possibility seems remote from where we’re standing. Indeed, Whitehall is still the only place that launches a digital strategy on paper!

But if we’re going to be a real digital government – rather than just a government that uses digital – we’re going to have to make some radical change.

If we really want to lead the world in these technologies…

…then we’re not going to do it running an analogue public sector and trying to help a 21stC private sector.

The two need to be working together.

And the time to be bold is now.

FOUR IDEAS FOR REFORM

So today I want to present four major ideas for how to accomplish this. Four key reforms to become a true innovation economy.

First, the single most important element of this new strategy must be changing the way we currently disincentivise public sector innovation.

As many of you know, there is a reason the private sector runs at 2% productivity gain a year.

If you deliver more for less in the private sector, you get promoted.

The opposite is true in the public sector.

If you deliver more for less in the NHS, we give you less.

In fact, it’s amazing we have ANY public sector innovation at all!

So to deliver this Innovation Economy we need a quiet revolution in public sector incentives.

Let me be absolutely clear: I’m not talking in any way about privatisation of public services.

But about giving great leaders the freedoms they deserve to innovate.

To unlock an Innovation Economy we also need to decentralise and reincentivise local leadership.

Many of the deep structural problems Whitehall is grappling with are not solvable by some single magic bullet or Golden Lever in Whitehall.

As an MP, I have a privileged perspective...

...seeing Whitehall during the week grapple with problems too big to solve, and seeing local solutions in local constituencies every Friday and Saturday.

Let me tell you this: the answers aren’t in Whitehall. They’re in the local services and the places where our constituents and taxpayers live.

Take the example of my own patch – Mid Norfolk.

I have a town called Watton in my constituency that is only 40 miles from Cambridge.

But, in reality, it might as well be 400 miles. A different century, even.

There is no train link and only one bus to Norwich a day.

While Cambridge down the road faces an inflationary house affordability and labour shortage, Mid Norfolk 40 miles away is a rural backwater.

And yet we have the means of solving it now.

Not tomorrow, not in a decade, not in fifty years. But now, right this minute.

Because upgrading the Cambridge-Norwich railway line would solve both problems. Easing the Cambridge housing market, and revolutionising the areas around it.

The problem is partly about infrastructure, but also about incentives. We have so many competing organisations in the infrastructure field that we have ensured no one has an incentive or powers to do what’s needed.

We know what the problem is. We know the reform this is needed. And we know the price we will continue to pay if we refuse to take action.

During the second world war, perhaps our last moment of major national crisis, Winston Churchill had the category ‘ACTION THIS DAY’.

Well we are at another national turning point now. Another make-or-break moment. While we might have been able to fudge and delay major decisions with the safety net of the European Union beneath us…

…as an independent nation once again, that luxury is no longer ours.

It is our duty now to make these reforms ‘ACTION THIS DAY’.

For simple reforms like the Cambridge-Norwich rail line, or indeed increased airport expansion, the excuses have run out.

We must take action this day.

Second, we need new ways of accelerating investment.

We urgently need to increase the pace of infrastructure and housing development. Rather than subsiding the housebuilders and circumventing the planning system, why don’t we empower our Mayors and LEPs to do real planning and raise infrastructure bonds and create mutual local development companies so local residents and taxpayers benefit more directly from growth?

In fact, why don’t we mutualise the East Anglan railway into an East Anglian Railway Company with planning permission to develop the 52 stations in East Anglia and raise an infrastructure bond to finance the fast rail connectivity Cambridge needs?

Equally, it is time we recognised that our current structural R&D spend is far too low.

Britain is a science superpower and a finance superpower. And yet we are terrible at connecting the City to science and taking our innovation global.

This – now, as we look to a future outside the EU – is the moment we need that to happen.

The moment we need ‘ACTION THIS DAY’.

That’s why I’m calling for a new joined up approach to Aid Trade and Security: offering Development Partnerships to selected developing nations we have good links with, and suggesting a DfID funded Global Citizenship Corps to give every school and collage leaver a 1 month spell on the frontline of an emerging country.

Third, to do all this we need to inspire a new generation of leaders.

Decentralising and reincentivising local leadership of public services and local economies and rebuilding UK plc one local economy at a time.

Finally, investing in and training our public-sector leaders.

That’s why I’ve called for a new Public Sector Leadership Academy to train the best and the brightest.

Brand it, export it, become the global centre for public sector innovation.

And help inspire our own public service leaders too.

Finally, an Innovation Economy both drives and demands a more open and dynamic society.

You can’t run an Innovation Economy without an Opportunity Society.

Fundamentally, that means giving every child a decent education.

Then a clear pathway into work - either through higher education or vocational training. A levels. And T levels.

The truth is, this Government has achieved a lot over the last seven years.

Nowhere more so than in Education.

But we still won’t begin to unlock this opportunity without a radical improvement in our education and skills. We will not be globally competitive or productive on a low-wage, low-skill service economy.

I believe this government’s greatest achievement has been to break the stranglehold of a politicised LEA system that too often tolerated big standard schooling. Seeing through the Blair Academy and Free School reforms has worked. Standards are up.

But now we need to go further.

Why don’t we give everyone a digital skills passport, a gateway to the 21stC economy?

Skills and productivity are the single biggest barrier to the innovation economy we need to tackle our productivity crisis, and more investment in schools and skills is a key part of the answer.

Not tomorrow, but now.

CONCLUSION – LABOUR’S REHEATED SOCIALISM CANNOT BE THE ANSWER

I want to conclude today, however, by addressing one key issue.

An issue that has dropped out of the headlines recently. A change in our political system that is profound, but also deeply worrying.

Now, I know you have John McDonnell addressing you later on.

And I want to say this to him – loud and clear.

Many aspects of our future are uncertain. But one thing is certain.

Some approaches will NOT work.

Comrade McDonnell’s Marxism isn’t the answer.

Nationalisation isn’t the answer.

State welfare dependency isn’t the answer.

More debt isn’t the answer.

Corbyn and McDonnell aren’t the answer.

Only a new generation 21st-century Conservatism based on innovation, creative disruption, competition, decentralisation and citizen empowerment can make this an inspiring moment of renewal for the next generation.

What we need now are the not the solutions of the past…

…but the solutions of the future.

Looking ahead to the 2030s, not back to the 1970s.

Quite simply, it would be a disgrace if we threw away the hard-won gains of the last forty years.

The Thatcher, Major, Blair, Brown, Cameron and May administrations have helped modernise politics in this country and modernise the way we do Government.

What we need now is an intelligent, principled, proper conversation between the centre-left and centre-right.

I said at the start of my speech that I believe this country DOES have the ambition, dynamism and vision to make a success of our post-Brexit future.

But we should be in no doubt that the choice is still ours to make. The pieces are still in flux.

So what will it be?

Will we be equal to this moment and embrace profound reform and renewal?

Or will we take cover, hide behind our silos, slogans and sound bites, and blame others as we oversee our country’s long-term decline?

Is this the moment that we will look back on in 20 years and say “you had to be there - as we renewed our economic, social and political model to make us fit for the 21stC Century”?

Or the moment we ducked our responsibilities to the next generation and chose to blame others and accept inevitable decline?

The choice is now ours to make.

Renewal or decline? The answer is up to us. ALL of us.

And the moment to decide is now.

Big Tent Ideas Festival

Politics is undergoing a tectonic shift. That’s why this year I launched the first-ever Big Tent Ideas Festival, aiming to tackle the most difficult policy challenges we face. Bringing together over a hundred thinkers across the political spectrum, we discussed new ideas on everything from Brexit to intergenerational fairness, centred around three main themes: Politics, Society and Economy.

The Big Tent Ideas Festival is part of the new Capital Ideas Foundation, and will be setting off round the country over the next twelve months as the forum for the best new ideas in public policy. Click below and join us.